The great anxiety underpinning this month's NPT talks in New York, and the deepening crisis over Iranian nuclear aspirations, is the fear that if and when Iran crosses the nuclear threshold, it would trigger an arms race across the Middle East. Israel already has an arsenal of course, but over a dozen other countries in the region have recently announced plans to pursue or explore civilian nuclear energy programmes, in what is seen as a hedge against future threats. But which states, if any, would be prepared to go the whole way?

The Centre for European Studies and the German Marshall Fund of the United States has just held a small conference in Brussels called "Transatlantic test: What should the West do with Iran?" There were a bunch of Nato types there and some diplomats from Europe and the Middle East, and some very interesting talk. What struck me were the relatively sanguine views on the knock-on effect of Iran going nuclear (or achieving break-out capacity).

Putting it briefly: Turkey would not jeopardise the Nato umbrella by going nuclear unilaterally. Egypt has considered its options and decided it cannot afford to go nuclear and risk losing its annual US grant. The biggest worry is Saudi Arabia, which cannot rely on a US nuclear umbrella for reasons of domestic and regional politics.

According to western intelligence sources (the meeting was under Chatham House rules so I am not allowed to be more specific) the Saudi monarchy paid for up to 60% of the Pakistani nuclear programme, and in return has the option to buy a small nuclear arsenal ('five to six warheads) off the shelf if things got tough in the neighbourhood.

There has been much reporting about this alleged deal over recent years, notably by The Guardian back in 2003, when Ewen MacAskill and Ian Traynor wrote about a Saudi strategic review to weigh the kingdom's nuclear options.

A report by Mark Fitzpatrick at the IISS in 2008 on Nuclear Programmes in the Middle East, found the Guardian article was "an accurate representation of what had emerged from the Saudi side during discussions" at a symposium in Britain attended by several members of the Saudi royal family.

The Saudis and the Pakistanis have consistently denied any such deal, but what I heard in Brussels was billed by an official as being from intelligence sources. Whether or not anything has been signed, however, there are real questions on whether Pakistan would deliver when it came to the crunch.

There is a third partner in the relationship, the US, who might have something to say about it and the means to exert pressure to make sure it did not happen. Still, it remains one of the more likely dominoes to fall in a worst-case scenario.

Another interesting point to come out of the Brussels meeting was how difficult it is inside Nato to make policy or even to talk about policy towards Iran, because Turkey will not allow it. That makes it a bit awkward when it comes to framing the alliance's New Strategic Concept later this year.